Work hard, play hard

23 February 2021 By George Hay Follow @gfhay

The kingdom has ruffled feathers with plans to withhold state contracts from groups that don’t base their Middle East headquarters in Riyadh. The rule may not apply to all sectors. Even so, bankers face a tricky call over whether to up sticks or risk angering a valuable client.

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The Saudi government will from 2024 stop giving state contracts to companies and commercial institutions that base their Middle East hubs in any other country in the region, the kingdom’s finance minister told Reuters in an article published on Feb. 16.

“This is not about Dubai or Abu Dhabi or any other city, this is about Saudi Arabia’s right to have its fair share of regional headquarters,” Mohammed al-Jadaan said.

Saudi Arabia is offering companies that set up regional headquarters in Riyadh zero corporate tax for 50 years, a waiver on mandatory quotes to employ Saudis for at least 10 years and potential favouring in government entities’ tenders and contracts, according to a brochure by Invest Saudi, the country’s investment brand overseen by the Ministry of Investment.

They would get relocation services, faster licence issuance and eased rules for work permits for spouses, it showed.

Some sectors would also be exempt from the decision to link state contracts to setting up regional headquarters, according to Jadaan. Detailed regulations will be issued before the end of 2021.

Bank of America and Morgan Stanley didn’t respond to a request for comment prior to Breakingviews going to press. HSBC, Goldman Sachs, JPMorgan and Credit Suisse declined to comment.

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“This is not about Dubai or Abu Dhabi or any other city, this is about Saudi Arabia’s right to have its fair share of regional headquarters,” Mohammed al-Jadaan said.

They would get relocation services, faster licence issuance and eased rules for work permits for spouses, it showed.

Some sectors would also be exempt from the decision to link state contracts to setting up regional headquarters, according to Jadaan. Detailed regulations will be issued before the end of 2021.

Bank of America and Morgan Stanley didn’t respond to a request for comment prior to Breakingviews going to press. HSBC, Goldman Sachs, JPMorgan and Credit Suisse declined to comment.

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